you can't do exactly that, but you can create a folder, and create albums of pictures. then drag the albums into that folder. Would this work for you?

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Yeah, that's how I use mine for one of my jobs. I manage an apartment building and have to take pictures that need to be filed in an apartment specific folder for organization and quick reference. So, I create a folder for the name of the building, and an album for each apartment (1A, 1B, etc.) where I can drag all of the apartment specific pictures while all are also filed under one main "Event" in iPhoto.

Another option is to tag each picture with sufficient info that you can create smart albums as needed, but that doesn't really help the sub-folder concept too much.

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